Spotlight

Indian markets are expected to open with a cautious undertone as investors continue to assess an increasingly complex geopolitical backdrop in the Middle East. While the renewal of the ceasefire agreement between Israel and Lebanon has provided some relief to regional risk sentiment, broader concerns remain unresolved. Continued hostilities between the United States and Iran, including reports of retaliatory Iranian actions following recent U.S. strikes, have kept uncertainty elevated and limited any meaningful improvement in global risk appetite. The absence of tangible progress towards a diplomatic resolution continues to leave markets highly sensitive to geopolitical headlines, particularly given the implications for energy prices and global trade flows.

Against this backdrop, investor attention is also firmly focused on the Reserve Bank of India's ongoing monetary policy meeting. Market participants will closely scrutinise the central bank's assessment of inflation, interest rates and liquidity conditions, while looking for clues on how policymakers view the impact of elevated crude oil prices and persistent global uncertainty on India's growth and inflation outlook. Any changes in the RBI's tone regarding future policy direction could have a significant bearing on domestic market sentiment and sectoral positioning.

Crude oil prices continue to hold near the $95–96 per barrel range, reflecting persistent geopolitical risk premiums. While prices have retreated from recent highs, they remain elevated enough to pose a challenge to India's inflation outlook, external balances and corporate profitability.  

Investors are also monitoring developments in India–U.S. trade relations following a proposal by the U.S. Trade Representative to impose additional tariffs on imports from several countries, including India. While the proposal remains under review and subject to further negotiations, it has introduced an additional layer of uncertainty for markets already navigating a complex global environment.

On the currency front, the Indian rupee remains under pressure, with USD/INR trading in the ?95.6–?95.8 range. Elevated crude oil prices, persistent foreign fund outflows and a broadly firm U.S. dollar continue to weigh on the currency, limiting the scope for a meaningful recovery.

Institutional flow dynamics remain another key area of focus. Foreign Institutional Investors (FIIs) have continued to maintain an aggressive selling stance in recent sessions, with sustained outflows acting as a significant headwind for domestic equities. In contrast, Domestic Institutional Investors (DIIs) have remained consistent buyers, helping absorb a substantial portion of foreign selling pressure and providing an important source of stability for the market.

Overall, investor sentiment remains cautious. While the renewal of the Israel–Lebanon ceasefire has offered some relief, elevated geopolitical risks, firm crude oil prices, sustained FII outflows and continued uncertainty surrounding the U.S.–Iran situation continue to constrain risk appetite. Greater clarity from the RBI's policy guidance, alongside developments on the geopolitical and trade fronts, is likely to play a decisive role in shaping the near-term direction of Indian markets.

Technical view

Nifty 50

Nifty 50 continues to trade with a cautious undertone as the index remains below key resistance levels despite the recent rebound from lower levels. Technically, the 23,500–23,550 region continues to act as an important immediate resistance zone. A sustained move above this range could improve market sentiment and pave the way for a recovery toward the 23,750–23,800 levels, with further upside potential extending toward the psychological 24,000 mark.
 
On the downside, the 23,250–23,150 zone remains a critical support area. Sustaining above this region will be essential to preserve the ongoing recovery structure. However, a decisive breach below 23,150 could trigger renewed selling pressure and expose the index to further downside toward the 23,000 level. Overall, the near-term technical structure remains cautious. While the recent rebound from support levels is encouraging, a decisive breakout above 23,550 will be required to strengthen bullish momentum and improve the broader market outlook.

Bank Nifty

Bank Nifty continues to trade with a mildly positive to cautious undertone, supported by its ability to hold above key support levels despite intermittent volatility. Technically, the 54,400 level remains an important immediate resistance area. A sustained breakout above this zone could strengthen bullish momentum and extend the recovery toward the 54,800–55,000 region, which continues to act as the next major resistance band.
 
On the downside, 53,600 now serves as an immediate support level. A decisive break below this mark could trigger profit booking and drag the index toward the 53,500–53,300 support zone, which remains a key demand area in the near term. Overall, the near-term technical structure remains cautiously positive. While the index is showing signs of recovery, a decisive move above 54,400 will be essential to strengthen bullish momentum and improve the broader outlook.